If you own a business that was created in a state other than North Dakota, you will need to qualify or register that business in North Dakota if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-North Dakota) limited liability company (LLC) to do business in North Dakota.
For North Dakota purposes, if your LLC is formed in another state, then it is known as a foreign LLC in North Dakota. In other words, foreign doesn’t mean from another country. Instead, it means your business was organized under the laws of another state. A domestic LLC, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an LLC formed in Alabama is a foreign LLC in Mississippi.
According to North Dakota’s LLC Act, you are required to register your foreign company with the state of North Dakota if you are “transacting business” in North Dakota. What does this mean? Well, like most states, North Dakota’s LLC Act does not specifically define the phrase “transacting business” in relation to foreign registrations.
However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state’s residents. Generally speaking, physical presence and nexus are synonymous, and mean having:
Certain exceptions may apply and the rules can get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that state. For more details, including some possible distinctions between physical presence and nexus, check Nolo’s articles on Internet Sales Tax: A 50-State Guide to State Laws.
Like most states, North Dakota’s LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:
For the full legal description of each of the listed items, check Section 10-32.1-82 of the LLC Act. If your LLC’s only activity in North Dakota is one or more of the listed items, you should not need to register with the state.
To register your business in North Dakota, you must file a Certificate of Authority Application: Foreign Limited Liability Company with the North Dakota Secretary of State (SOS). You can download a copy of the application form from the SOS website.
To complete the form, you must provide more or less the same information that you need to create an LLC in your home state. However, since every state is a little different, there may be items that North Dakota asks for that you did not need to provide when you first organized your LLC. More specifically, for the North Dakota application, you need to provide:
You must include with your application a certificate of good standing or certificate of existence authenticated by the organizing officer (such as the secretary of state) of the state where your LLC is organized. The certificate must have been certified within 90 days of filing the application.
If you want or need to use a trade name, you must include a trade name registration, which you can download from the SOS website. For more information on trade name issues, review the instructions included with the certificate of authority application form.
The application filing fee is $135. The trade name registration fee is an additional $25.
If your LLC does business in North Dakota without having a certificate of authority, it cannot bring a lawsuit in the state. It also will be liable for a civil penalty of up to $5,000 and may be prohibited from transacting further business in the state until penalties are paid. In addition, each LLC governor, member, or agent who authorizes, directs, or participates in the transaction of business in North Dakota without a certificate of authority will be subject to a civil penalty of up to $1,000. However, not having a certificate of authority does not invalidate your LLC’s contracts or prevent your LLC from defending a lawsuit in the North Dakota.
If your business is organized as a corporation rather than an LLC, the rules and requirements for foreign qualification in North Dakota are similar. You will, however, have to use a different application form, Form SFN 13100, Certificate of Authority Foreign Corporation Application. See the North Dakota Secretary of State website for forms and filing instructions.